The manufacturing industry across the country is facing a labor crisis, and Wisconsin is no different. Manufacturers are forced to deal with strong production demand, quick order turnaround time and a shortage of workers to facilitate production. As job posts go unfilled, Wisconsin manufacturers are evaluating productivity improvements and automated equipment as methods to increase throughput with their existing workforce.
This can be a daunting task for manufacturers that have little experience with automation, and they may worry about picking the wrong project to invest in, overinvesting in the right project or how equipment might impact production flow.
Though the questions aren’t always identical, they do condense to one core concern: “How do I make the right automation investment for my business?”
Wisconsin has more than 9,400 manufacturers, each with its own core competencies and position in the market. That’s 9,400 unique scenarios where the right-sized project for one manufacturer may be completely different than that of its direct competitor down the road. In order to help determine a road map for automation implementation, right-sized projects are evaluated in three critical areas:
• Cost — Does this project have a positive ROI, and does it support my strategic initiatives for growth?
• Pain — Does this project solve an existing pain point for my business or my employees?
• Risk — Is the risk associated with automating this application acceptable?
Manufacturers that explore the details of these three critical areas and develop methods for evaluation can create a road map for an automation investment that supports their unique business.
Return on investment is typically the first method manufacturers use to determine project priority. It seems simple enough to calculate, yet often positive and negative impacts to ROI are overlooked in lieu of a straight net labor cost savings estimate or a production throughput increase estimate. A deeper-level ROI calculation will incorporate potential material and scrap cost changes as well as total quality cost impacts.
In the current market, the costs of finding, hiring and training employees can provide a significant justification for projects themselves. Stories where manufacturers must hire five people to find one who fits are not uncommon. Even more sophisticated ROI calculations will evaluate recordable injury events and apply potential insurance savings for automating a high-recurrence process based on industry experience modification rates.
While the ROI basis for evaluation helps shine a light on potential viable projects, the projects must support the business strategy for growth within the manufacturer. Investing to support production of a growth segment of business in most cases makes more sense than investing in a long-term product with declining sales.
Manufacturers that focus their investment on quick wins to solve an existing manufacturing pain can gain full internal support for their projects. Eliminating a painful process for the production floor can allow manufacturers to sidestep the passive resistance that occasionally can accompany automation projects onto the shop floor. The painful process might be a hard-to-support 50-year-old piece of equipment or an assembly substation that operators quit when assigned to for the day.
Internal production pain can also be caused by prevalent quality issues. Automation can improve process quality, which can mean reduced product returns, corrective actions and support trips to customer sites for warranty claims. It can also amplify quality issues from suppliers that may be providing subcomponents out of tolerance. Understanding where the pain in your manufacturing processes comes from is critical for selecting right-sized projects.
When manufacturers assess overall risk for a potential automation project, they can eliminate projects from the list just as quickly as with a poor ROI scenario. You can evaluate risk from the direct process/application level all the way up to partner selection and long-term support. Quickly assessing the automation risk for processes on the manufacturing floor allows internal resources to focus their time on worthwhile efforts.
The technical details of a risk evaluation allow manufacturers to prioritize potential projects into high-, medium- and low-risk categories. Reviewing the subcomponent delivery methods, process rates, overall process maturity, part variants and total part counts are a few technical details of a project that can help highlight risk. Automation projects may introduce a new technology that requires a high level of support that exposes a manufacturer to additional risk.
Many Wisconsin manufacturers have the internal abilities to design and implement their own automated systems. For those that don’t have the skill set in-house, the partner selection for a project poses an additional risk factor. Project schedules, system documentation, cost overruns and long-term equipment support capabilities are all areas that can push a right-sized quick win from a positive experience into a manufacturer’s last automation experience. Preliminary Proof of Process development work can help manufacturers alleviate risk by prototype testing targeted solutions and at the same time test-driving a potential partner for automation.
It’s an exciting time to be in manufacturing. Whether companies are exploring automation for the first time or evaluating their next automation implementation, they can benefit from right-sized project analysis. The trifecta of cost, pain and risk analysis can help manufacturers develop an automation road map for one- to three-year investment of quick wins that align with their business strategy.
Colin Wilson is the service line leader for Automation Consultants with WMEP Manufacturing Solutions. He developed WMEP Automation Advisor services to help Wisconsin manufacturers develop strategies for automation. He has over 13 years of experience in manufacturing automation, from field service and applications support to developing custom automation equipment.